Facebook Full IPO Filing Details (FB, MS, GS, MSFT, TROW, ZNGA, GSVC, IPG)

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Facebook, Inc. has now filed its paperwork with the SEC which will allow the social networking giant to conduct an initial public offering.  It should be no real surprise that financial terms were not disclosed.  The filing is for an offering of up to a whopping $5 billion in common stock and that figure may change before the actual IPO. The offering appears to include shares from the company and shares from selling holders.  Facebook is the top spot in the 24/7 Wall St. Top 17 IPOs of 2012.

While Facebook has said that it is choosing the “FB” stock ticker, it did not specify whether or not the NYSE or NASDAQ would get the listing.  Keep in mind that Mark Zuckerberg is where the buck stops if you evaluate the share structure.

Be advised that there is a dual-class of stock with A shares and B shares.  Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.

The underwriting group is as follows: lead book-runners are Morgan Stanley, J.P. Morgan, and Goldman Sachs; co-managers are BofA/Merrill Lynch, Barclays Capital, and Allen & Company.

BASIC STATS:

  • 845 million monthly active users,
  • 2.7 billion likes and comments per day,
  • 250 million photos uploaded per day,
  • and 100 billion friendships.
  • The company also has 483 million daily active users.
  • It also had roughly 3200 employees as of December 31.

Microsoft Corporation (NASDAQ: MSFT) is listed as a competitor and it is an owner, while Google Inc. (NASDAQ: GOOG) is not an owner and is listed as a key competitor.  Twitter is competitor.  As a reminder, GSV Capital Corporation (NASDAQ: GSVC) is an owner of stock as well.  Interpublic Group of Companies, Inc. (NYSE: IPG) still owns a small stake as well.

We are now finally getting to see at least some of the preliminary figures from Facebook to use for financial analysis:

  • 2009 revenues $777M, $122M net income for shareholders;
  • 2010 revenues $1.974B, $372M net income for shareholders;
  • 2011 revenues $3.711B, $668M net income for shareholders.
  • The company’s cash and marketable securities at the end of 2011 was $3.908 billion.

Zynga Inc. (NASDAQ: ZNGA) accounted for about 12% of 2011 total revenues for Facebook.

Mark Zuckerberg owns 28.4% of the total voting power, but he has a proxy over insider shares that gives him 56.9% of the total voting power.  Other big holders are James Breyer at 11.4% and Peter A. Thiel at 2.5%.  Large Class B share holders (1 million or more shares) are Sheryl Sandberg, David Ebersman, Mike Schroepfer. Theodore Ullyor, Marc Andreesson…

T. Rowe Price Associates, Inc. (NASDAQ: TROW) owns over 6 million class A shares and affiliates of Goldman Sachs Group Inc. (NYSE: GS) own over 65.9 million Class A shares.

As of December 31, 2011 there were outstanding:

  • 117,097,143 shares of our Class A common stock held by approximately 110 stockholders;
  • 1,758,902,390 shares of our Class B common stock held by approximately 1,070 stockholders;
  • 258,539,434 shares issuable upon exercise of outstanding stock options;
  • 378,772,184 shares subject to outstanding restricted stock units (RSUs).

RISK FACTORS AS FOLLOWS:

  • “If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed;”
  • “We generate a substantial majority of our revenue from advertising. The loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm our business;”
  • “Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;”
  • “Facebook user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control;”
  • “We may not be successful in our efforts to grow and further monetize the Facebook Platform;”
  • “Our business is highly competitive, and competition presents an ongoing threat to the success of our business;”
  • “Improper access to or disclosure of our users’ information could harm our reputation and adversely affect our business;”
  • “Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could harm our business;”
  • “Our CEO has control over key decision making as a result of his control of a majority of our voting stock;”
  • “The loss of Mark Zuckerberg, Sheryl K. Sandberg, or other key personnel could harm our business;”
  • “We anticipate that we will expend substantial funds in connection with tax withholding and remittance obligations related to the initial settlement of our restricted stock units (RSUs) approximately six months following our initial public offering;”
  • “The market price of our Class A common stock may be volatile or may decline, and you may not be able to resell your shares at or above the initial public offering price;”
  • “Substantial blocks of our total outstanding shares may be sold into the market as “lock-up” periods end, as further described in “Shares Eligible for Future Sale.” If there are substantial sales of shares of our common stock, the price of our Class A common stock could decline.”

Again, the Top 17 IPOs to Watch in 2012 is here.

JON C. OGG

The full S-1 SEC FILING is here.  PS… The traffic to the SEC.gov website was severely limited for almost an hour due to excessive traffic flooding the site due to readers wanting to read the Facebook S-1.